Investment is an activity that is engaged in by people who have

savings and investments are made from savings.

Advanced some money to another.

Purchased one kilogram of gold.

Purchase an insurance plan.
Employment of funds with the aim of achieving additional
income or growth in values or the commitment of resources which
have been saved in the hope that some benefits will accrue in
future.
a commitment of funds made in the expectation of some
positive rate of return.
 Return:

Risk:

Liquidity.

Hedge against inflation.

Safety
 Main objectives
Maximisation of return
Minimisation of risk

Other subsidiary objectives:

Maintaining liquidity
Hedging against inflation
Increasing safety
Saving tax
 Investor
Difference between investor and speculator:
Time Longer time horizon.
horizon
Risk Assumes moderate risk.
Return Likes to have moderate rate of
return associated with limited
risk.
Decision Considers fundamental factors
and evaluates the performance
of the company regularly.
Funds Uses his own funds and avoids
borrowed funds.
Safety Here safety is primary and
return is secondary.
Speculator
Plans for a very short
period.
Willing to undertake
high risk.
Like to have high
returns for assuming
high risk.
Consider inside
information, hearsays
and market behavior.
Uses borrowed funds to
supplement his
personal resources.
Focuses more on return
than the safety.
 Investment Process

Portfolio Portfolio
Investme Valuatio Evaluati
Analysis Constructio
nt Policy n on
n

Diversificati
on: Debt-
Investible Market
Intrinsic equity,
fund Appraisa
value Industry,
Objectives Industry l
Future company.
Compa Revision
value Selection
Knowledge ny
and
allocation
Stages of the Investment
Process
 Investment Avenues

Securitie Deposit Postal Real

Insurance Assets
s s Schemes
Monthly
Stocks Income
Bonds/Secu Scheme(MIS Life Real
rities Bank ) Insurance estate
G-securities Deposits National policies Precious
Money Non- Saving Unit Linked metals
market Banking Scheme(NSS Insurance Art and
instruments Financial ) Plan (ULIP) antiques
Derivatives Company Vikas
Mutual (NBFC) Patras
Investment Avenues:
Funds deposits Public
Provident
Fund(PPF)
 International affairs.
National affairs.
Industry information.
Company information.
Stock market information
1) Primary Market ( New Issue Market)

2) Secondary Market ( Stock Market)

 Managers to the issue.

Registrar to the issue.

Underwriters.

Bankers to the issue.

Advertising Agents.
 Maintains Active Trading

Fixation of Prices

Ensures Safe and Fair Dealing

Aids in Financing the Industry.

Dissemination of Information

Performance Inducer

Self-regulating Organization
How a trade actually takes place on a stock exchange?